Market Overview

Drexel Downgrades Disney On NBA Concerns, Prefers Time Warner Instead

Share:
Drexel Downgrades Disney On NBA Concerns, Prefers Time Warner Instead
Related DIS
Hollywood Seeks Salvation At San Diego Comic-Con In Midst Of Summer's Box Office Slump
The Most Bought And Sold Stocks Of The First Half Of 2017, According To TD Ameritrade Clients
One FANG, One 95+ Stock: Both 2% Off Buys With Earnings Monday (Investor's Business Daily)
Related TWX
Hollywood Seeks Salvation At San Diego Comic-Con In Midst Of Summer's Box Office Slump
Follow The Money: 5 Summer Blockbuster Media Deals

Walt Disney Co (NYSE: DIS) and Time Warner Inc (NYSE: TWX) are already feeling lots of heat from cord-cutting competitors like Netflix, Inc. (NASDAQ: NFLX). However, Drexel Hamilton analyst Tony Wible believes the two traditional TV giants will also soon be dealing with major costs associated with NBA renewals.

Live sports is one of the few remaining advantages cable TV has over Netflix and other online streaming options. However, those sports deals don’t come cheap. Wible believes the cost of Time Warner and Disney’s NBA deals could be much higher than the market is anticipating. In fact, he estimates that the cost of the deals could jump 120 percent year-over-year.

“We're downgrading DIS to Hold as this risk is amplified by incremental sub loss concerns, Shanghai losses, and difficult studio comps,” Wible explains.

Related Link: Disney Trading At Lowest Valuation Since 2009

He notes that Disney could see its NBA renewal price increase by between $690 and $740 million. For Time Warner, Drexel Hamilton estimates a $280 to $430 million NBA price hike.

While the firm has downgraded Disney’s stock from Buy to Hold, the firm maintains its Buy rating on Time Warner. Wible believes Time Warner is better-positioned to offset the rising costs via VMVPD bundles and direct OTT sales.

Latest Ratings for DIS

DateFirmActionFromTo
May 2017MacquarieDowngradesOutperformNeutral
Apr 2017Loop CapitalDowngradesBuyHold
Apr 2017RosenblattInitiates Coverage OnNeutral

View More Analyst Ratings for DIS
View the Latest Analyst Ratings

Posted-In: Drexel Hamilton Tony WibleAnalyst Color Downgrades Top Stories Analyst Ratings Best of Benzinga

 

Related Articles (NFLX + DIS)

View Comments and Join the Discussion!